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Tariff Reform in the Presence of Sector-Specific Distortions

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  • John Beghin
  • Larry S. Karp

Abstract

The problem of choosing second-best trade policies is modified by including sector-specific policies as well as tariffs. Formulae for the optimal tariff and sector-specific subsidy are derived and used to study the design of optimal policy menus. The theory is applied to a computable general equilibrium model of the U.S. economy that emphasizes agriculture. The model suggests that nonagriculture distortions do not provide a second-best argument for substantial levels of agricultural protection.

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Bibliographic Info

Article provided by Canadian Economics Association in its journal Canadian Journal of Economics.

Volume (Year): 25 (1992)
Issue (Month): 2 (May)
Pages: 294-309

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Handle: RePEc:cje:issued:v:25:y:1992:i:2:p:294-309

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Postal: Canadian Economics Association Prof. Steven Ambler, Secretary-Treasurer c/o Olivier Lebert, CEA/CJE/CPP Office C.P. 35006, 1221 Fleury Est Montréal, Québec, Canada H2C 3K4
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Cited by:
  1. Karp, Larry, 1997. "A Neoclassical View of Trade Liberalization," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt13f2q378, Department of Agricultural & Resource Economics, UC Berkeley.

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